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Grim Math at Forbes

By David Carr October 28, 2009 10:31 amOctober 28, 2009 10:31 am

Earlier this week, Steve Forbes announced that there would be cuts at the bi-weekly business magazine owned by the family, but few would have guessed that the cuts would go as deeply as one in every four people on the editorial side.

Depending on how you count, there are about 200 editorial employees at the magazine. And depending on who you talk to, at least 40 people could be cut, while one source who was not authorized to speak about the layoffs said the number could go as high as 60.

“You have to wonder how they are going to get the magazine out,” the source said. “Who is going to do the physical work of putting together the issue?”

Another employee, heading into work not knowing if the day would end with a job, described the atmosphere as akin to a “funeral parlor” and said it was unclear how deep the cuts would go.

Forbes is hardly alone in the making cuts – Condé Nast has been closing magazines and laying off, while Time Inc. is working on another round of buyouts/layoffs before the end of the year – but the downsizing at the independent magazine is on a scale all its own.

It is a riddle of modern magazining that during a period when staffs are expected to file early and often to the Web to make sure that publications have a significant digital presence, all the while still making the print product, that they are now confronted by dramatic cuts in staff that raise practical issues of getting the work done.

Executives at Time Inc. announced that the frequency of Fortune would be cut to 18 issues a year from 25. So far, there are no indications that Forbes will drop in frequency.

Ad paging at most magazines is dreadful and the bottom has yet to appear, but the business category has been particularly fraught. Fortune is down 34.9 percent in advertising pages in the first three quarters of the year compared to 2008’s meager totals, BusinessWeek, which was recently purchased by Bloomberg, is off 34.7 percent, and Forbes is down the least at 30.8 percent.

The upheaval in the stock markets, the implosion of ads from Detroit (always a huge category for the business magazines) plus consolidation in business-to-business spending have left all the magazines in the category wondering when their collective toes might touch bottom.

In announcing forthcoming layoffs on Monday, Mr. Forbes telegraphed the seriousness of the matter at hand, if not the scope of the cuts.

“We -– and the entire media world — have been hit hard by both the severe recession and the seismic shifts wrought by the Web. Given these dramatic events, further layoffs, unfortunately, are necessary across the entire organization,” he said.

He wasn’t kidding. Decoder has been covering media long enough to know that there is plenty of fat in American publishing models and that the current contretemps have merely forced media organizations to rationalize their staffing.

But the latest news is more akin to amputation on the field of battle than right-sizing surgery. We are moving into a realm where the level of cuts raises practical issues of putting out an adequate supply of both print and digital content to maintain a brand and retain the advertisers and readers that remain.

The quality of a respectable publication will diminish if the staff is spread too thin, whether this perception is based on speculation or reality. If I were told a restaurant cut 1/4 of its staff, I wouldn’t eat there. While I empathize with those soon to carry pink slips and for those who must let their peers go, my experience leads me to think many at the senior level consider a casually-maintained twitter account to be good-enough “digital content”, which they often leave up to underpaid interns. They simply aren’t moving quickly enough to adapt to these “seismic shifts wrought by the Web.”

So Time Inc. has its annual layoff ritual, in which hundreds of loyal and dedicated journalists and support staff get kicked to the curb, while those “leading” the company get to dodge hard questions about the lack of vision and foresight that led them to this purge. Why don’t Ann Moore and John Huey fall on their swords, admit that they haven’t a clue how to run a magazine publishing company, and just resign so they can count their millions of dollars in pay, stock options and bonuses. Clearlly, these two deserve to go. If your answer to declining readership and advertising is simply to make your product worse and fire hundreds of people, that’s not exactly what I would call creative thinking.

The difficulties that these magazines are having is indicative of the commodization of the equity market and the devaluation of fundamental analysis. Day trading, quantitative trading, and even high frequency trading (which I don’t fathom) added to programs such as CNBC’s Fast Money and Cramer don’t require “think pieces” about what companies are doing. Those are for long-term investors. Who? What’s that?